We have a LLC in which one of the partners receives a commission based on sales. We treat this as a guaranteed payment. The partner earns his fourth quarter commission in Q4 but doesn't get paid until the customer pays which is in Q1. The LLC and partners all have calendar year ends. We accrue the partner's commission/guaranteed payment at 12/31/2013. When is the partner taxed on his guaranteed payment? It seems he would get taxed on it in the year he gets paid (2014), not when it is earned (2013). Is there a rule, that if the partner gets paid his guaranteed payment within a few weeks after year end, he needs to include it in the prior year (in this case 2013)?
- posted
10 years ago